How Lawsuits Are Impacting Our Healthcare System

August 8, 2016 7:13 am

Lawsuits are unavoidable in the healthcare field. No matter how well preventative medicine is practiced, things will still happen and people will be harmed. Many people are firm believers that lawsuits are a nuisance and only cause the cost of healthcare to skyrocket.

While lawsuits do cause an increase in healthcare costs, there are also other ways that they impact our healthcare system, many of them for the good. This includes increasing the quality of healthcare provided in order to avoid lawsuits. Regardless of your thoughts on lawsuits in the medical field, you need to be aware of how they are impacting the cost and quality.

Increasing the cost of prescription drugs and medical devices

Lawsuits do increase the cost of healthcare overall, but not as much as you would think. Doctors must pay for malpractice insurance, drug companies pay out settlements, and insurance companies raise their rates to cover it all. This cost is not absorbed by the industry and instead is passed along to consumers (as it is in any industry).

There are numerous causes of action being filed against those in the healthcare field which leads to increased cost. Some of the most common include lawsuits for dangerous drug and medical devices. There was even a recent lawsuit filed against Johnson & Johnson over baby powder, claiming that it is linked to ovarian cancer.

Tort reform is unlikely going to bring down the cost of healthcare. A recent study showed that defense medicine (the term used to define the cost spent to defend medical lawsuits) only accounts for 2.9% of overall healthcare costs. That means that even if all lawsuits were forbidden, you would only save a total of $2.90 off a prescription drug that cost $100. Not much of a savings.

For those who like to tout lawsuits as the reason for drastic increases in cost of coverage, keep in mind that the implementation of the Affordable Care Act has affected cost as well (both for the better and worse). So when you see a dramatic increase in the cost of your healthcare coverage, keep in mind that lawsuits only account for roughly 3% of that increase.

Improving diagnosis, treatment, and follow-up care:

Big data is rapidly changing the way companies look at things. This includes healthcare providers and insurance companies. A recent article in The Wall Street Journal detailed how mining data from past malpractice claims is being used to improve patient care.

According to the author Laura Landro, “Their goal is to identify common reasons that doctors are sued and the underlying issues that threaten patient safety.” She adds that this data is being shared with medical providers who can use the data to develop new protocols and strategies.

The hope is that those in the healthcare field are able to learn from the past reasons why people filed lawsuits. While it will help reduce the risk of future lawsuits, the ultimate goal is actually to improve the type of healthcare we receive. After all, everyone can learn from mistakes and what better industry than healthcare?

There are some studies that suggest the opposite, but the overall quality of healthcare has been improved because of lawsuits. Drug manufacturers and healthcare facilities have changed how they operate based on prior lawsuits. If only this, harms that have been caused in the past are likely to be avoided because they went through litigation.

Summing it up:

Overall, lawsuits are increasing the cost of healthcare. However, the actual cost is insignificant compared to other reasons for cost increases. Lawsuits are also helping change the way patients are cared for, proving healthcare facilities with usable data on why patients sue and how to implement strategies to prevent those harms from happening in the future.